Ignored veto divides president, majority over booming gambling industry

Tirana Times
By Tirana Times September 13, 2018 12:43

Ignored veto divides president, majority over booming gambling industry

Story Highlights

  • In his suspensive veto returning the legal changes for reconsideration by Parliament, President Ilir Meta argued the government-proposed amendment eased the tax burden and also failed to curb a booming phenomenon that has not slowed down despite nationwide campaigns and legal changes aimed at discouraging gambling in downtown areas

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TIRANA, Sept. 13 – The ruling Socialists ignored a presidential veto this week as they turned into law some legal changes which the president had previously turned down by arguing they eased the tax burden and failed to discourage a booming business with negative effects for the country’s economy and society.

In a session boycotted by the opposition and not attended by representatives of the President’s office who said they had not been informed about it, ruling majority MPs cancelled the presidential veto to finally turn into law some legal changes which they say apply a unified 15 percent profit tax on gambling companies.

The president’s office argues the legal changes approved by the ruling Socialists in early July and vetoed by the president in late July cut the gambling tax to 15 percent of gross earnings calculated as the amount remaining after the distribution of profits to gamblers compared to a current 15 percent turnover rate, significantly reducing the tax burden on gambling operators.

However, the government says the legal changes have been misinterpreted by the president as the gambling tax remains unchanged and the sole change to the 2015 gambling law is that the gambling tax on the loss-making Austrian-run national lottery has been unified to 15 percent compared to a current 10 percent.

Austrian Lotteries launched its Albania operations in 2013 after it was given a 10-year licence to organize Albania’s first ever national lottery and offered a 10 percent tax rate. Back in mid-2016, the Austrian Lotteries Albania operations were taken over by another Austria-based company already present in Albania with a chain of electronic casinos following accumulated losses.

In his suspensive veto returning the legal changes for reconsideration by Parliament, President Ilir Meta argued the amendment also failed to curb a booming phenomenon that has not slowed down despite nationwide campaigns and legal changes aimed at discouraging gambling in downtown areas.

“The gambling business model does not produce added value for the society, on the contrary the expansion of this industry brings potential risk that impoverish Albanian households and cause social drama,” argued the president.


Casinos no longer in town

Speaking at the parliamentary economy committee this week, Finance Minister Arben Ahmetaj defended the legal changes as applying equal 15 percent tax rate on all companies and said 2016 legal changes disciplining gambling in downtown areas would finally come into force starting January 2019 following a two-year extension in 2017.

Minister Ahmetaj said electronic casinos will no longer be allowed in downtown areas starting January 1, 2019 and the booming sports betting shops also serving as coffee bars be disciplined at a distance of not less than 200 meters from each other.

The legal changes initially scheduled to come into force in January 2017 were postponed for two years in late 2016 ahead of the mid-2017 general elections after some ruling Socialist MPs described the legal changes as premature and posing a threat to the industry employing 1,800 people and generating an annual $125 million in turnover and taxes.

Legal changes limit the geographical location of casinos only to areas determined for tourism development or five-star hotels or tourist resorts and set restrictions for the booming sports betting industry.

Transferring casinos outside Tirana is an initiative that began in 2012 when former Tirana mayor Lulzim Basha, the current leader of the main opposition Democratic Party, imposed higher tax burden for casinos operating in downtown Tirana, but failed to displace them outside Tirana, including the country's sole casino that still operates in the city center.

Back in October 2013, soon after Edi Rama took office as the country’s Prime Minister, he initiated a nationwide campaign dubbed “The End of Madness” that closed down dozens of illegal gambling businesses, vowing zero tolerance to an activity which he said “cannot be the future of the country even legally.”

Five years on, gambling remains a booming business and casinos and betting shops have grown in numbers and are even found close to schools or religious institutions.

A 2017 report by Albania’s Supreme Audit Institution, identified about 50 billion lek (€390 million) in gambling income that state authorities failed to collect from 2014 to 2016. The revenue miss is related to the Gambling Supervisory Authority’s failure to impose and collect fines following seizure of games of chance equipment, often operated informally or not meeting technical requirements following the late 2013 nationwide campaign that closed down dozens of illegal gambling businesses in a bid to curb widespread informality in a sector that generates more than €100 million in income annually.


Albanians gambling more

Finance minister Ahmetaj says government revenue from gambling have increased to $54 million compared to $37 million in 2013 when the Socialists took over and there are fewer companies operating, some 20 compared to 40 five years ago.

However, data shows Albanians are spending more and more on gambling and sports betting shops have flourished in the past few years, making Albania one of top countries with the highest per capita betting shops.

Albania had more than 3,900 betting shops at a rate of 1 per 730 local residents this year, setting a European record, according to data obtained by local media.

Albanians reportedly spent a record 16.6 billion lek (€132 mln) in gambling in 2017, up 10 percent compared to the previous year, according to turnover data reported by the main electronic casino, lottery and sports betting companies.

Gambling is a booming business in Albania and varies from lotteries, electronic casinos and more numerous sports betting shops. A gambling law, which has been in force for several years, bans people under 21 from entering betting shops, but regardless, teenagers are often seen there.

The booming gambling businesses is often linked to gangs laundering crime and drug proceeds. There have been also cases when even senior officials and judges have justified some of their income through winnings in betting shops or casinos in their wealth declarations.

Albanian authorities have selected an Austrian-Polish-Albanian concessionaire to set up, operate and maintain an online central monitoring system on Albania’s gambling industry for the next 30 years amid opposition by gambling authorities who unsuccessfully appealed the law at the Constitutional Court over an increase in the tax burden.


President-Gov’t clash

The final approval of the gambling legal changes by Parliament also marks the first official clash between President Meta and the ruling majority.

The president, whose powers are largely ceremonial, had previously exercised his suspended veto power on a bill paving the way for the demolition of an Italian-built WWII building in downtown Tirana that has served as the country’s national theater for about eight decades in a controversial project that has divided Albanian politicians and actors. The new contemporary architecture theater is supposed to be built by a private company in return for being offered public land to build business towers next to it, but the president argues the bill has violated market competition through its negotiated procedure and fails to preserve national heritage values. The bill is back for reconsideration and the ruling majority MPs seems to have withdrawn following a European Commission letter suggesting open competition for the project.

President Meta is a former experienced politician who has served as the country’s Prime Minister and Parliament Speaker and also led the country’s third largest party for more than a decade until he took office as president in mid-2017. The now opposition Socialist Movement for Integration which he led served as a kingmaker with both the Democrats and the Socialists from 2009 to 2017.

The final approval of gambling legal changes by the ruling Socialist in Parliament also comes at a time when the country’s constitutional court is non-operational due to a vetting process underway as part of a judiciary reform having dismissed several judges after failing to justify their financial assets.

The main opposition Democratic Party and its allies have also been boycotting Parliament this month following the summer beak, arguing their absence with alleged rising corruption and government links to gangs hampering rule of law.

The ruling Socialists, who won 74 out of 140 seats in the mid-2017 elections allowing them to govern on their own, had 78 votes in favour this month as they approved a mid-year budget cut amid a boycott by the opposition. The ruling Socialists are yet short of the three-fifths of votes, 84 MPs, required to push reforms.

Tirana Times
By Tirana Times September 13, 2018 12:43